CBH Engineering Holding Berhad - Another DC-Related Contract Secured
Fri, 17-Oct-2025 07:50 am
by Tan Sue Wen • Apex Research

Counter

CBHB (0339)

Target Price (RM)

0.60

Recommendation

Buy

Another DC-Related Contract Secured

  • CBHB has secured a RM20.7m contract for the design and installation of high-voltage early works for a 275kV substation supporting a proposed data centre in Johor. The award lifts its outstanding order book to RM522.6m, equivalent to 1.9x FY24 revenue.

  • Assuming a gross profit margin of 20% (excluding SST), the project is expected to generate c.RM3.9m in gross profit over 11 months, with the majority of earnings recognition in FY26F.

  • No change to our earnings forecasts as the contract win is within our order book replenishment assumption.

  • Maintain BUY with a higher TP of RM0.60 (from RM0.50), based on 18x FY26F EPS of 3.3 sen and supported by a three-star ESG rating. We have raised our target PE multiple from 15x to 18x to reflect CBHB’s robust growth outlook driven by data-centre opportunities.

 

RM20.7m Contract. CBHB has secured a RM20.7m contract from a Malaysian company for the design and installation of HV early works for a 275kV substation supporting a proposed data centre in Johor Darul Ta’zim. The scope covers in-ground conduit systems, earthing systems, steel structures, cable sealing ends, and related high-voltage installations. The contract is effective from 16 Oct 2025 and is expected to achieve practical completion by 15 Sep 2026.

 

Our Take. We view the award positively, as it should support CBHB’s earnings growth through FY26F. This marks the fourth contract secured in FY25, bringing total YTD wins to RM471.6m. Assuming a 20% gross profit margin given the early-works natureand and after stripping out SST, the contract is expected to generate c.RM3.9m in gross profit over the 11-month duration, with the bulk of earnings recognition expected in FY26F. We see minimal execution risk, as the contract value is relatively small. Following this award, CBHB’s outstanding order book stands at an estimated RM522.6m (1.9x FY24 revenue), strengthening its medium-term earnings visibility.

 

Outlook. We expect near-term data-centre job momentum to remain strong, supported by continued hyperscaler investments in DC and AI infrastructure. Based on Electricity Supply Agreements (ESAs) signed, c.6.1GW of data-centre projects are still under construction, underscoring strong demand for HV substation works over the next 12-18 months. With a proven track record in delivering HV substation projects for data-centre clients, we believe CBHB remains a key beneficiary in this segment. The company’s tender book remains healthy at around RM650m, with the majority linked to DC-related projects and supported by a robust historical win rate of about 20%.

 

Earnings revision. No change to our earnings forecasts as the contract win is within our order book replenishment assumption of RM560m. 

 

Valuation & Recommendation. We have raised our target PE multiple from 15x to 18x to reflect CBHB’s robust growth outlook driven by data-centre opportunities following the recent contract win. New TP of RM0.60 (from RM0.50) is based on 18x FY26F EPS of 3.3 sen and incorporates a three-star ESG rating. Reiterate BUY. We remain positive on CBHB, given its (i) strategic role as a proxy for Malaysia’s rising power demand, (ii) established track record in delivering HV substations tailored for DC operators, and (iii) robust supplier relationships that enable cost-efficient procurement. 

 

Risks. High exposure to the DC sector, inability to secure new contracts, and unexpected project delays.

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